This was in Monday’s Writer’s Almanac:
We don’t know when Adam Smith was born, but it was on this day in 1723 that Smith, the economist who popularized the idea of free trade, was baptized in Kirkcaldy, Scotland. His first important book was The Theory of Moral Sentiments (1759), in which he argued that all people are selfish, but that the combined selfishness of many people benefits everyone. He wrote, “[We are] led by an invisible hand … without knowing it, without intending it, [to] advance the interest of the society.” He developed this idea in the book for which he is best remembered, Wealth of Nations (1776). That book established many of the most important principles for economists for the next two hundred years.
Adam Smith wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”
Today is also the birthday of the economist John Maynard Keynes, (books by this author), born in Cambridge, England (1883). He’s best known for his book The General Theory of Employment, Interest and Money, published during the Great Depression in 1935. He argued that governments can correct severe depressions by spending lots of money, even if it means running a deficit, to put people back to work. Keynes greatly influenced Franklin D. Roosevelt’s New Deal policies, and his ideas have been used to justify budget deficits ever since.
Interesting that these two men share a birthday, or something like it. Also interesting that the birthday is so close to my own. (At least it’s interesting to me.) A couple thoughts to share… mostly on Smith.
Invisible Hand? Not So Much
The Invisible Hand is broken… if indeed it ever existed. Within the constraints of perfect competition, the Invisible Hand the collective selfishness might (See my next thought.) work out to the benefit of most… or at least many. Not in today’s economy, which is a far cry from anything resembling perfect competition. Atomicity? Nope; try oligarchy. Homogeneity? Perhaps, but billions of marketing dollars are working hard to obfuscate that fact. Perfect Information? Equal Access? Free Entry? Not if the oligarchies have anything to say about it… and they do!
No, the Invisible Hand of the market has been bound and gagged. Motivated self-interest serves only the self, and those who possess power are best able to serve themselves.
Selfishness Is NOT an Agent of Good
It is noteworthy that Smith doesn’t say, “People will overcome and progress beyond selfishness, attaining to a more noble fundamental value.” No, he says in effect: “We’re all selfish bastards, and that ain’t gonna change. Fortunately, there is Something beyond our selfish little souls to protect us from each other.”
As a Christian I have to respond, “Close, but not far enough.” True Something is kind enough to protect us from ourselves to an extent, but it doesn’t end there. There is the possibility of real transformation of the soul. Self-interest need not be our driving motivation. Instead, our souls can be moved by genuine love.
Check Please!
The economic difference between Republicans and Democrats has nothing to do with accepting or rejecting Keynesian theory. Maybe it did at one time, but not anymore. Both parties embrace a bigger government role, because it protects their power and position. They only quibble over where government should expand next.
I was ready to shut the door on politics in 2004. Today, the door still remains cracked… but just a little. I’ve got some thinking to do here, still.
When I think of selfishness and politics I can’t do much but laugh. To me, this is where the comunistic idea comes in. We should all help one another. We should all give ourselves to the greater good. If we all contribute what we can (And we all can contribute something positive) then we can make this world a WONDERFUL place. The idea of creating tribes as described by Daniel Quinn in his books is a great example of this. I could discuss this idea at great length, but won’t without prompting. In today’s political Dems and Repubs we have two parties who are not trying to embrass the best of each of us. Dems want to give away, thus creating lazyness. Repubs don’t care about others, thus driving them away. Money is not the root of all evil, but what you do with it and how you treat others because of it often is.
-RG
My take on our two-party system is a little more cynical than yours. Using you’re basic analogy: The Dems want to give away, thus creating dependence in order to preserve and build their own power. The Repubs don’t care about those without power. They partner with others in power in order to preserve and build their own power. It’s all about power.
Let me ask you: Where does the motivation to “help,” “give,” and “contribute” come from? I’d also be interested to hear a bit more on the idea of tribes.
I don’t see the great quest for power that you do, but I understand how it can be viewed that way.
The motivation to “help”, “give”, and “contribute” must come from within. And here is part of where the idea of the tribe comes into play. You are a good writer and able to draw out people, but you don’t have the ability to create layouts, thus you need someone to help with that. You go out and find that person and say you’d write for them in exchange for them to create layouts. There begins the circle and it expands from there. Knowing that you can do more than one thing, you have more skills to offer in exchange to your tribe (Oh no, you now have POWER). The tribe idea works close to communism because you are all working for the greater good of the tribe, each according to their ability. The big thing is that there is a point at which the circle gets as wide as it can get, and you must cut it off (think if your circle of close friends for instance). There are going to be some things that your tribe can’t do. For that you may have to make deals with other tribes to make that happen, but still, everyone in your tribe is taken care of and noone is left wanting. I highly recommend “Ishmael”, “My Ishmael”, “The Story of B”, and “Beyond Civilization” to see Daniel Quinn’s idea of the tribe. I borrow, poorly, from him.
RG
As best I can tell, nearly everything in D.C. is about power. There are probably some notable exceptions, but they are definitely exceptions.
The idea of tribes as you lay it out sounds a lot like Smith’s Invisible Hand. It’s utilitarian and relies on self-interest – namely an awareness of one’s inability to do everything for oneself. What about those who have nothing to offer, or whose offerings are not desired? Where does that leave them? Also, what gets us beyond taking advantage of one another? If I can dupe you into giving me something without having to give something in return, what’s to stop me? On what basis is an appeal to “fairness” or “justice” made? I see nothing in history that gives evidence to humankind’s ability to overcome these problems within itself.
I think the abuse of power is mainly due to the two party system we have. If we had no parties then OUR representives would be able to represent US and not the party. Of course, I wish sometimes for a more true democracy in which to live.
I haven’t read Smith’s Invisible Hand. Will have to pick it up one day. I will say that there is not one person out there who has nothing to offer to the tribe. Everyone needs someone to sweep the floors or cut the grass or whatever (I mean no disrespect for anyone who does that for a living. Seriously, I respect that you do it.).
As for those who will take advantage of others or cheat or be lazy or whatnot, I think they will always be there. We are by nature lazy animals. Only through morals and values and teaching ethics (including work), can we truly arrive at a place where most people will act correctly most of the time. It is hard to be moral and correct. It is sometimes expensive to set standards and not give in because it’d be easier. Something has to teach us to push for what is right, to do the job till it is done well, and that is why it takes a tribe to raise a child.
RG
Great Post. Seriously, one the best I’ve read all day. I didn’t know about these authors and I’ve heard of the Wealth of Nations but never read it.
I think the laws of economics are changing with the world economy. I might be wrong, but that’s my 2 cents.
-Bryan
http://www.BryanCFleming.com
Bryan,
Thanks for the kind words. I don’t know that the laws are changing. Rather, I think we’re getting better at manipulating the outcomes the the laws produce.